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Video / Rich Media
SSPs
Ad Networks
Vertical Custom
P
UBLI
AUDI
A
DVER
AdExchanges
DSPsMedia BuyingDesks
Agencies Sharing Data/Social Tools
Where We Are Today
2
CreativeOptimizationTargeted Networks / AMPs
Performance
Mobile
HERS
NCE
ISER
S
PublisherTools
Ad Operations
Ad Servers
Ad Servers
Data Suppliers
DMPs and DataAggregators
Media Planningand Attribution
Media Mgmt Systems
Verification
Retargeting
Measurementand Analytics
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Video / Rich Media
Horizontal
YieldOptimization
Ad Networks
Vertical
P
UBLI
AUDI
A
DVER
AdExchanges
DSPsMedia BuyingPlatforms
Agencies Sharing Data /Social Tools
Trading Desk
Landscape Observations
3
Targeted
Performance
Mobile
HERS
DataExchanges /Aggregators
CreativeOptimization
DataOptimization
NCE
ISER
S
PublisherTools
Data Suppliers
Ad Ops / Infrastructure
Ad Servers Ad Servers
Verification /Attribution
Analytics
Data Suppliers
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$4
$5
$6
$7
$8
Bn)
Q1 2011 Was Highest Q1 Ever
$7.3 Bn
Online Advertising Accelerating
4
$0
$1
$2
$3($
The display advertising market is forecast to grow over 30% morethan the overall online advertising market from 2009 to 2014
Notes:Source: Interactive Advertising Bureau (IAB).
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Video / Rich Media
YieldOptimization
Ad Networks
Vertical Custom
P
UBLI
AUDI
A
DVER
AdExchanges
DSPsMedia BuyingDesks
Agencies Sharing Data/Social Tools
$10.0
$12.3
$8.0
$10.0
$12.0
$14.0
$Bn)
Exchange-Based Buying MarketExchange-Based Buying Market
But Exchange-Based Buying is Still a Small Market
CreativeOptimization
Targeted Networks / AMPs
Performance
Mobile
HERS
NCE
ISER
S
PublisherTools
Ad Operations
Ad Servers
Ad ServersData Suppliers
DMPs and DataAggregators
Media Planningand Attribution
Media Mgmt Systems
Verification
Retargeting
Measurementand Analytics
$0.7$1.4
$0.0
$2.0
$4.0
.
2010A 2011E
Display Advertising Exchange-Based Buying
Despite doubling YoY, exchange-based ad buying is expected tocontinue to be a small part of the overall display ad market
5
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Brands increasingly moving their ad spendonline
The rise of private exchanges, proprietarydata sets and premium ad networks
Brands fully embrace digital video and
Notable Trends
6
Google (and others) continue to marchacross the display advertising landscape
Agencies and ad networks recognize thechallenges and respond
Appearance of comprehensive marketing
solutions providers
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High impact formats (video, richmedia and new, engaging formats)
Increasing transparency and
DRIVERS:
Brands Moving Online
sense o ran sa e y
Following the audience (timespent)
Real ROI
7
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40%
50%
60%
pondents
What brandmarketers want
What brandmarketers get
Which metrics are most valuable for brand-building campaigns?Which metrics are most valuable for brand-building campaigns?
But There Are Challenges
0%
10%
20%
30%
PercentofR
e
8Notes:Source: Bain & Company
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AwarenessAwareness
OpinionOpinion
ConsiderationConsideration
Brands focused here Brand Awareness Favorability
Current metrics and newtechnologies focused here
Brands Care About the Top of the Funnel
IntentionIntention
SalesSales
9
Time spent Interaction Conversion / sales
The metrics that brands care about correspond to top of funnel
activities rather than conversion and click throughs
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Brands Care About Inventory Quality
By buying on longer tail sites, audience targeting exposes brands
to the potential to advertise against questionable content
10
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High quality
properties Brand-safe
inventory
Engaging formats
Premium Networks
Professional video
content In-stream ad units
Access to inventoryat scale
Video Networks
Leading publishers
and advertisers RTB capabilities
Proprietary,differentiated data
Private Exchanges
Brand-Oriented Solutions Offer Quality and Safety
11
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Premium publisherinventory & data
Optimized Pricing
Real time biddableinventory
Transparent
Category 5 Private Exchange
The Rise of Private Exchanges
12
Private exchanges enable brands to buy safe, targeted inventory whileenabling publishers to enter RTB market and protect CPMs
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US Online Video Ad Spending ($Bn) (1)US Online Video Ad Spending ($Bn) (1)
Format2010 Ad
Spend ($Bn)2015 Ad
Spend ($Bn)2010 ~ 2015
CAGR
Search $12.0 $21.5 12%
Banner Ads 6.2 11.7 14%
Classifieds and
$5.6
$7.1
$6.0
$8.0
Video is Growing and Outpacing Other Formats
US Online Ad Spending Growth by Format (1)US Online Ad Spending Growth by Format (1)
13
Directories. .
Rich Media 1.5 1.7 2%
Video 1.4 7.1 38%
Lead Generation 1.3 1.5 3%
Sponsorships 0.7 1.5 15%
Email 0.2 0.2 2%
Total $26.0 $49.5 14%
$1.4
$2.2
$3.1
$4.2
$0.0
$2.0
$4.0
2010 2011 2012 2013 2014 2015
Notes:Source: Wall Street Research.
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Delivery / ContentManagement EnablersContent Creators MonetizationPublishing Tools
Aggregation /Portals
Video Value Chain Fragmented Like Display
Like display, there are several areas across the video value chainthat will benefit from the growth in online brand advertising
14
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vs.
Online Video Growth Drivers
15
Audience viewing habits changing; moving to time-shifted media consumption
Video streaming represents 32% of time spent online
Online video advertising more engaging than TV
Video advertising promotes greater brand recall
Beginning to draw from TV budgets
Improved targeting technology
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AwarenessAwareness Social media is altering the purchase
funnel and creating a closed loopbetween awareness & branding
Data from Facebook, Twitter, reviews,comments and other social platformsbeing used by marketers to drive
Impact of Social Media
SalesSales
16
Social is a key component of online brand advertising campaigns
branding and conversion
Building a social presence is ofincreasing importance to brands
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Agencies Recognizing the Challenges
17
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Video / Rich Media
SSPs
Ad Networks
Vertical Custom
P
UBLI
AUDI
ADVER
AdExchanges
DSPsMedia BuyingDesks
Agencies Sharing Data/Social Tools
Google Gets It
18
Creative
OptimizationTargeted Networks / AMPs
Performance
HERS
NCE
ISER
S
PublisherTools
Ad Operations
Ad Servers
Ad ServersData Suppliers
DMPs and DataAggregators
Media Planningand Attribution
Media Mgmt Systems
Verification
Retargeting
Measurementand Analytics
Mobile
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Networks creating new offerings, pivoting oracquiring businesses that bring desiredcapabilities
Some ad networks have attempted to transformtheir core business models to address new needs
Video / Rich Media
Ad Networks
Vertical Custom
So Do Ad Networks
Others have acquired desired capabilities
Networks need to evolve to survive and succeed
19
Targeted Networks / AMPs
Performance
Mobile
Media Mgmt Systems
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Who Else is Meeting the Needs of Brands?
20
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CMO
RTBCreative
OptimizationVendors
RetargetingData Management
Platforms
Display Ad Tech Point Providers
The Quest for Integrated Solutions
21
While the landscape is full of point providers, todays CMO is looking forcomprehensive solutions providers that can drive efficiencies
Integrated Display Advertising Optimization Solution Provider
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Focus has moved from CTOs office to CMOsoffice in quest to grow business while maximizingROI
Ever increasing options for the CMO acrossmultiple channels (TV, radio, print, online display,di ital video search etc.
Decade of the CMO
Increasing complexity and proliferation oftechnologies designed to drive efficiency
Ever-evolving landscape with alphabet soup of
vendors
In todays constrained environment, the CMO is tasked with findingcreative ways to grow top line while maximizing bottom line
22
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Marketers are demandingcomprehensive solutions to managingtheir online marketing spend
Current landscape is too fragmentedand confusing
$6,000
$8,000
ealValue($MM)(1)
Digital Media M&A TransactionsDigital Media M&A Transactions
Consolidation is Inevitable
23
New entrants, such as large capenterprise software providers and adnetworks, are becoming more active inad tech M&A
Large technology companies haverecord amount of cash on balance sheetand are looking to deploy it for growth
$0
$2,000
4,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2009 2010 2011
DigitalMedi
aD
Notes:(1) GCAS database.
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Strategic M&A and Investment Activity
24
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Recently, there has been an up-tick in private-to-private M&Adeal activity
Larger private companies using M&A to:
Increase scale in advance of IPO or other event
Broaden suite of product offerings to meet needs of advertisers
Evolve business
Private-to-Private Transactions Increasing
25
Take advantage of price capitulation
Acquired
October 2010
Acquired
October 2010
Acquired
July 2011
Acquired
February 2011
Acquired
December 2010
Acquired
November 2010
Acquired
November 2010
Acquired
November 2010
Acquired
February 2011
Acquired
April 2011
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Billions invested in ad tech landscape over last few years
Focus on investment returns may drive near-term consolidation
Time is important element of determining investment returns
Return Formula More Important Now
Returnn( )- 1
1
d=
t
26
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MarketingAgency
Targets
Diverse Strategic Interest in Ad Tech Innovators
Network / Data
Technology
27
Ad Networks
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Strategic Fit
Diverse Strategic Interest in Demand-Side Ad Tech
Ability / Willingness to Pay
28
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Exchange-based buying will be an important component of display but only a component
Real revenue will continue come from direct buys and brand-oriented solutions
Private exchanges and programmatic premium buys will continue to
Key Takeaways
29
Video and social will become dominant branding markets
Maybe agencies and networks will be okay
The CMO needs help and comprehensive solutions
This will continue to be a strategically important market
Thank You
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TOKYO SAN FRANCISCO MENLO PARK CHICAGO NEW YORK LONDON MUMBAI SHANGHAI
GCA Savvians Digital Media Advisory Business
Leading investment banking firm with over 200 professionalsworldwide
Services include advice on mergers and acquisitions, privatecapital finance and restructurings
Advised on over $70 billion in transactions since 2006
Leading advisor to media companies new and old
30
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Preferred EquityInvestment andCredit FacilityAcquired by
Acquired byAcquiredby
$5.9Bn
Tender Offer
$9Bn
TOB of CommonStock of
Acquired by
Formation ofJV with
Acquisition of
Semiconductor Business
$522MM$150MM
Divestiture ofU.S. Venture
Portfolio
Selected Cross-Border Transactions
Acquired by
Leading Global Independent Advisory Firm
31Offices in San Francisco, Menlo Park, Chicago, New York, London, Mumbai, Shanghai and Tokyo
75MM
$500MM$448MMto
$493MM
o a ein Acquired by
$1.3Bn
Acquired by
$300MM
$10.8Bn $747MM
Acquired by
$1.6Bn
Acquisitionof
GmB H Automotive
ATE Operations
Acquisitionof
$400MM
Acquired byAcquired by
Formation ofJV with
$690MM
Acquisitionof
$1.1Bn
Acquisition of Acquisition of
Next Gen. Mobile Comm.Systems Assets
Select OP-1 Assets &Manufacturing Facility
Acquisition of
Acquisition of
PVOH Business
Acquisitionof
$125MM
Yamakawa Trading Co.
Over 50 successful cross-border transactionsrepresenting nearly 15 different countries
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Acquired By Acquired By Sale of Subscription Acquisition of JV from Sale of Business Unit Secondary Preferred Stock Acquired by Acquisition of
Music Service to Mogae Consultants Six Apart KK to Sale
We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Buyer We Advised the Seller We Advised the Founders Financial Advisor We Advised the Seller We Advised the Buyer
May 2011 April 2011 March 2011 January 2011 January 2011 January 2011 December 2010 December 2010 November 2010
Preferred Stock Acquired by Acquisition of Preferred Stock Acquired by Acquired by Acquired by Acquired by Acquired by
Financial Adviser We advised the seller We Advised the Buyer Financial Advisor We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller
October 2010 October 2010 October 2010 August 2010 July 2010 June 2010 June 2010 June 2010 January 2010
1UP Digital Networ k
Proven Leadership in Digital Media Transactions
32
Sold Stake in
Preferred Stock Acquired by Preferred Stock Preferred Stock Acquired by Minority Preferred Preferred Stock Preferred Stock
a Subsidiary of Investment in
to
Financial Advisor We Advised the Seller Financial Advisor Financial Advisor We Advised the Seller Financial Advisor Financial Advisor We Advised the Seller Financial Advisor
October 2009 April 2009 February 2009 January 2009 January 2009 November 2008 November 2008 October 2008 August 2008
Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Acquired by Preferred Stock Preferred Stock Acquisition of
& Recapitalization
Mobile Services Business
Financial Advisor Financial Advisor Financial Advisor Placement Agent Financial Advisor We Advised the Seller Placement Agent Placement Agent We Advised the Buyer
July 2008 July 2008 June 2008 April 2008 March 2008 February 2008 January 2008 January 2008 December 2007
Acquired by Acquired by Acquired by Acquisition of Acquired by Senior Credit Facility Preferred Stock Merger with Minority Investment
in
We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Buyer We Advised the Seller Financial Advisor Placement Agent We Advised INTAC Financial Advisor
December 2007 December 2007 December 2007 October 2007 October 2007 October 2007 October 2007 October 2007 August 2007
FRONTLINE
MANAGEMENT
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